SYDNEY, AUSTRALIA —The Australian Competition and Consumer Commission (ACCC) has commenced market consultation on proposed revised undertakings offered by a consortium assembled by Brookfield Asset Management Inc. that includes Brookfield Infrastructure Partners LP in relation to the proposed acquisition of Asciano Limited.

The revised undertakings have been proposed to address the preliminary competition concerns identified by the ACCC in the Statement of Issues released on Oct. 15.

While the ACCC has decided to publicly consult on whether the undertakings will be satisfactory to address the ACCC’s preliminary competition concerns, this should not be interpreted to mean that these or any other form of undertakings will ultimately be accepted.

Following the proposed A$8.9 billion acquisition, Brookfield, based in Canada, would own Asciano’s rail network and train operations in two of Australia’s eight states. This includes Pacific National, which operates on Brookfield’s rail network in Western Australia and transports products to Brookfield’s terminal in central Queensland.

"Indeed, the commission has not yet had the opportunity to consider these undertakings fully but considers that its views on the undertakings will benefit significantly from market feedback," ACCC Chairman Rod Sims said. “Past experience has shown that the commission needs to emphasize that the release of these undertakings for public comment should not be interpreted as a signal that the ACCC will ultimately accept these undertakings.”

This is the second undertaking remedy proposed by Brookfield following the release of the ACCC’s Statement of Issues. The initial undertakings offered to the ACCC relied solely on behavioral commitments by Brookfield not to engage in certain behavior to address the vertical competition concerns. These were rejected by the ACCC on Nov. 26 after careful consideration of the likely effectiveness and enforceability of the proposed undertakings.

On Dec. 14, the ACCC suspended its timeline at the request of Brookfield in order to allow a revised undertaking proposal to be considered. In the absence of this, the ACCC would have made a final decision on the transaction on Dec. 17 as scheduled.  Each new undertaking proposal put forward by merger parties requires the ACCC to examine and consider the proposal and will therefore inevitably delay the ACCC’s final decision.

The revised proposal involves two undertakings:

-A commitment to divest to an independent party, Pacific National’s intermodal business, which 
 operates the interstate freight service around Australia, and Pacific National’s limited bulk rail
 operations in Western Australia; and

-Commitments to ensure independent operation and decision-making at Brookfield’s Dalrymple 
 Bay Coal Terminal.

The ACCC now seeks views from market participants to assist the ACCC to determine whether the revised undertakings would be likely to alleviate the ACCC’s competition concerns.

Parties wishing to make submissions should do so by Jan. 22, 2016.

Following market consultation, the ACCC will decide whether to accept or reject the proposed undertakings. The ACCC anticipates making its final decision on the revised undertakings by Feb. 18, 2016 in conjunction with the ACCC’s final decision in relation to Brookfield’s proposed acquisition. However, the ACCC notes that the timing of its final decision on the proposed undertakings and the proposed acquisition may vary depending on the nature and extent of any concerns raised during the market consultation process and the ability of Brookfield to respond to these concerns in a timely manner.